Payroll Tax Holiday Garners Republican Support

November 28, 2001 (PLANSPONSOR.com) -Republican
leaders have backed Senator Pete Domenici's (R - New Mexico)
payroll tax-holiday proposal as a way to end the
congressional deadlock over an economic stimulus package,
according to a report from Reuters.

The proposal is included in the $100 billion compromise
package that Republicans are offering instead of supporting
a Democratic-backed proposal that gives cash rebates to
low-income workers who did not benefit from earlier income
tax rebates, and a Republican-backed measure that would
repeal of the corporate alternative minimum tax.

The proposed month-long break from income taxes would mean
immediate cash for both workers and employers, who pay an
equal share of the 12.4% payroll tax. The break on payroll
taxes would be effective in January at the earliest.
Since the payroll tax is used to finance Social Security,
general revenues would have be used to make up the $43
billion shortfall it would create in the retirement
system.

According to the report, Senate Majority Leader Tom
Daschle (D – South Dakota) said Democrats were willing to
look at the payroll tax and other ideas for economic
stimulus and urged Republicans to begin talks.

However, he insisted that discussions include a
Democratic proposal for $15 billion in spending to beef up
security at the nations transport, mail and nuclear
facilities.